Facebook’s Takeover of Giphy Worries UK’s Competition Regulator

• UK’s Competition and Market’s Authority raises some serious concerns about Facebook’s acquisition of Giphy.
• The social media giant already has a monopoly on the internet and advertising industry, and this takeover is making it worse.
• The final report will be out in October 2021, and Facebook may be forced to sell Giphy.

Last year, Facebook acquired Giphy for $400 million, bringing aboard the popular GIF-making platform to its social media ecosystem, hoping that this would come as an engagement and post-interaction booster for the users. Since the first moment of the announcement, many of the 700 million daily users of Giphy started to worry about what happens with their data and what power they had over it anymore. Today, the UK's Competition and Markets Authority (CMA) has issued a press release calling the merger potentially risky for healthy competition on social media platforms.

Because Giphy is so popular and widely used, CMA believes that the impact on other social media platforms that directly compete with Facebook could be negative. That is especially the case if Facebook decided to make the integration tighter by introducing various user-friendliness features, essentially giving the platform an advantage that is impossible to compensate.

In summary, CMA finds that Facebook, WhatsApp, and Instagram, all belonging to the same corporate entity, are already worryingly big, accounting for over 70% of the time people spend on social media platforms.

In addition to that, the agency touches on the subject of targeted advertising and how the acquisition threatens to form dire conditions for consumers there as well. The inquiry group maintains that Facebook could very easily force other entities to pay a fee to access the data derived from the GIFs shared by millions of users, their friends, family, and colleagues.

Previously, Giphy was offering innovative paid advertising programs, but these have been terminated following last year’s acquisition deal. The merger removes a potential challenger to Facebook in the £5.5 billion display advertising market in the UK, of which 50% already belongs to Zuckerberg’s company.

CMA’s remarks are only provisional at this point, so a complete report isn’t out yet. However, the press release doesn’t paint a good picture for Facebook. Also, the merger is being reviewed by other competition authorities in the US and the EU, who are exchanging findings, information, and expertise. As such, we expect to see their reports resonating on the same message, so the chances of having Facebook forced to get rid of Giphy appear significant. We will get to know more on October 6, 2021, when CMA plans to issue its final report.